G.R. No. 201193 , June 10, 2019
TRANQUILINO AGBAYANI, Petitioner, vs. LUPA REALTY HOLDING CORPORATION, Respondent.

FACTS

Petitioner Tranquilino Agbayani, residing in the USA, filed a complaint for reivindicacion and cancellation of title against respondent Lupa Realty. He alleged that a 1997 Deed of Absolute Sale conveying his land to Lupa Realty bore a forged signature, as he was abroad on the execution date. He sought the reinstatement of his original certificate of title. Lupa Realty defended itself as an innocent purchaser for value, asserting it acquired the property from Moriel Urdas, who had purchased it from Tranquilino’s brother, Nonito Agbayani. Lupa Realty filed a third-party complaint against Moriel, who in turn filed a fourth-party complaint against Nonito.
During trial, Tranquilino failed to present a handwriting expert to prove forgery and did not present evidence to rebut the chain of transactions from Nonito to Moriel to Lupa Realty. He relied on testimonies from his nephew and tenants regarding possession. The Regional Trial Court (RTC) ruled in Tranquilino’s favor, declaring Lupa Realty’s title void. The Court of Appeals (CA) reversed the RTC, dismissing the complaint and finding Lupa Realty a purchaser in good faith.

ISSUE

Whether the Court of Appeals erred in reversing the RTC and ruling that Lupa Realty was an innocent purchaser for value, thereby validating its title.

RULING

The Supreme Court denied the petition and affirmed the CA ruling. The legal logic rests on the failure of Tranquilino to substantiate his claim of forgery and the presumption of regularity accorded to notarized documents and registered titles. A Torrens title, once registered, is presumed valid, and the burden of proof to overturn it lies with the challenger. Tranquilino did not present clear and convincing evidence, such as expert testimony, to prove the forgery of his signature. His mere denial, unsupported by competent evidence, is insufficient to overcome the presumption of authenticity of the notarized deed.
Furthermore, Lupa Realty established it was a purchaser in good faith. It exercised due diligence by verifying Moriel’s ownership through the previous notarized deeds of sale from Tranquilino to Nonito and from Nonito to Moriel before purchasing the property. The series of notarized documents enjoy the presumption of regularity. Tranquilino’s act of entrusting his owner’s duplicate certificate of title to his brother, Nonito, facilitated the subsequent transactions, contributing to the appearance of a valid chain of title. Consequently, Lupa Realty’s title, derived from a registered transaction, is protected under the Torrens system. The action for declaration of nullity is not the direct proceeding to attack a Torrens title, and Tranquilino’s failure to prove his case with preponderant evidence warranted the dismissal of his complaint.